Here at ShowingTime we're always looking for new ways to think about the real estate market. One simple, yet powerful, metric we’ve developed and use frequently in our reports is inventory of homes for sale.
Inventory represents the active supply of homes on the market. Any time a seller lists a property, it's considered to be part of inventory. As the number of homes on the market is always changing, we thought a more dynamic metric could be helpful; we call it “Active Inventory.”
For example, let’s say only two homes were listed this year in an area of Gotham. One was listed on March 15 and the other on April 15. Had it taken 60 days to sell each home, the inventory level on April 30 would be at 2. However, if the homes were on the market for just 30 days, the inventory count on April 30 would have been 1 – 50% lower than in the first scenario. This is noteworthy because the number of homes sold during the year would still be the same.
Using Active Inventory as a metric provides a more accurate picture. Unlike the active listings and/or normal inventory metric, which is a snapshot of how many homes are on the market on the last day of the month, Active Inventory tells you how many homes you would have seen come and go as you continue looking for a period of time.
Active Inventory may be especially useful for our InfoSparks clients who can zoom in on the market segment they're interested in to see how many homes of a certain type were on the market during the month.
Throughout 2016 and into 2017, the number of homes for sale has been declining in many markets, yet we haven’t necessarily seen a corresponding decrease in sales. When trying to assess the situation in real time (before the sales close and get properly reported), it’s not always easy to know whether real estate professionals are closing more or less business compared to previous years.
As a reminder, the Active Inventory metric is available for all associations and MLSs subscribing to our Infosparks products and/or pdf reports. If you have any questions, please contact your account manager.
- By Brianne Marshall
InfoSparks is an interactive market analytics tool that changes the way real estate pros use and share housing information. From area comparisons to customizable variables to trend analysis, you'll love the simplicity of InfoSparks. Request a demo to learn more.